1. Industry small - market share is important.
2. Talent is important - Their best talent is likely much better than my middle performers and not making a ton more than they are.
3. Step on throat and offer best talent sugar.
4. Get rid of middle talent. They will either get better and be my new competition (that I have tons of backstory on) or they do something else with their lives.
Either way, everyone loves winning. All you need to do as a firm in any vertical is put out one product everyone loves and all is forgiven. Doing this sort of thing when your product sucks is what you need to avoid. Prior to 4e launch it would have been very wise to take down the competition and assume their top talent while getting rid of chaff. But there's no way I'd have let Monte go. Stupid move on their part. When you have iconic employees that are worth their weight in marketing and PR, you do what you have to to keep them.
Overtly, even in a situation like this one, I'd not have gotten personal or directly offended anyone due to the size of the industry. Can't control how other people take it but if I keep someone like Monte, go after someone like Mearls or Buhlmann hard and let Bill, Tess, Derek and Mary go, in favor of folks that will playtest the hell out of something for 15 an hour. I'm better off for the next product cycle at least.
Informed in business, uninformed in the RPG industry, but assuming that one product cycle can kill a brand so I'm not looking at the long game much. Keep quality employees, put a muzzle on the social media without making sure that there's a unified message behind everything and put out the best product.
KB